Ladies and gentlemen, thank you for standing by, and welcome to the Celestica Acquisition of PCI conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker today, Craig Oberg, Vice President of Corporate Development and Investor Relations. Thank you. Please go ahead. Welcome everyone to our conference call to discuss Celestica's acquisition of PCI Limited. During this conference call, we will make forward-looking statements within the meanings of the U.S. Private Securities Litigation Reform Act of 1995 and applicable Canadian securities laws. Such forward-looking statements are based on management's current expectations, forecasts, and assumptions, which are subject to risks, uncertainties, and other factors that could cause actual outcomes and results to differ materially from conclusions, forecasts, or projections expressed in such statements. For identification and discussion of such factors and assumptions, as well as further information concerning forward-looking statements, please refer to yesterday's press release, including the cautionary note regarding forward-looking statements therein, our most recent annual report on Form 20-F, and our other public filings, which can be accessed at sec.gov and sedar.com. We assume no obligation to update any forward-looking statement except as required by law. In addition, during this call, we will refer to various non-IFRS financial measures, including Celestica's operating margin, free cash flow, gross debt to non-IFRS trailing 12-month adjusted EBITDA leverage ratio, and adjusted EPS, and PCI's adjusted EBITDA margin, adjusted gross margin, and the EV/EBITDA multiples of specified peers. Listeners should be cautioned that references to any of these measures during this call denote non-IFRS financial measures and non-GAAP measures in the case of PCI and specified peers, whether or not specifically designated as such. These non-IFRS and non-GAAP financial measures do not have any standardized meanings prescribed by IFRS or GAAP and may not be comparable to similar measures presented by other public companies that use IFRS or who report under US GAAP and use non-GAAP financial measures to describe similar operating metrics. We refer you to yesterday's press release and the slide presentation, which are available at celestica.com under the investor relations tab for more information about these non-IFRS and non-GAAP financial measures, including their definitions, and with respect to Celestica, the location of reconciliations of these non-IFRS financial measures to the most directly comparable IFRS financial measures from our financial statements. We do not provide reconciliations for forward-looking, non-IFRS financial measures as we are unable to provide a meaningful or accurate calculation or estimation of reconciling items, and the information is not available without unreasonable effort. All PCI historical financial information and projected results concerning PCI have been provided to us by PCI. See the section captioned "PCI Information" of the slide presentation accompanying this discussion for additional assumptions with respect thereto. On this call, we will also refer to adjusted gross margin and EV/EBITDA multiples of specified peers. See the section captioned Market and Industry Data in the slide presentation accompanying this discussion for a detailed description of this information. Unless otherwise specified, all references to dollars on this call are to US dollars, and per share information is based on diluted shares outstanding. On the call with me today is Rob Mionis, our President and Chief Executive Officer, Mandeep Chawla, our Chief Financial Officer, and EL Teo, Chief Executive Officer of PCI Limited. Following our prepared remarks, we'll open up the call for Q&A with Rob, Mandeep, and EL. I'd like to hand the call over to Rob. Thank you, Craig. Good morning, and thank you for joining us on today's conference call. This is a great day for Celestica. The acquisition of PCI is an exciting moment for our company as it builds on the strong foundation we have created over the last several years and helps accelerate our path to consistent margin expansion and sustainable long-term revenue and earnings growth. Before we talk about our acquisition of PCI, I'd like to recap some of the important steps we have taken over the last few years to strengthen Celestica. Since 2016, we've executed a bold strategic transformation to strengthen our portfolio. Our strategy has focused on building our presence in high-growth, high-value end markets, enabling us to capitalize on emerging industry trends while moving up the value chain to provide end-to-end solutions throughout the product life cycle. In the early stages of the journey, we took decisive steps to position Celestica for success in the years to come. This included transformational actions such as disengaging from $1.25 billion of revenue not aligned with our strategy, driving a $75 million network-wide efficiency program, and making strategic acquisitions in both the aerospace and defense and capital equipment industries. As our transformational actions started to yield results, more recently, we have been focused on optimizing our portfolio through targeted investments in engineering platforms and new capabilities in both ATS and hardware platform solutions. As we look forward, we are excited to be entering into what we see as a growth phase of our journey, with targeted organic revenue growth in 2022 across ATS and hardware platform solutions or our lifecycle solutions portfolio, which now represents 60% of our total revenues. Growth is also expected to be driven inorganically through acquisitions such as PCI. The successful execution of our transformation and optimization initiatives has enabled us to drive improved non-IFRS operating margin, generate strong and consistent non-IFRS free cash flow, and significantly strengthen our balance sheet. This has resulted in a great deal of financial flexibility to invest in our business through R&D and CapEx, while simultaneously returning capital to our shareholders through share buybacks. In fact, over the past five years, we have deployed almost $200 million to reduce our share count by approximately 10%. As we walk you through the details of our acquisition of PCI, we will highlight how the addition of PCI will diversify and further enhance our ATS offerings, providing us with additional expertise and capabilities to continue to expand our presence in attractive, high-margin markets. With PCI as part of Celestica, we will build on our leadership position with innovative design and engineering capabilities in high-growth markets. We are also excited to welcome aboard EL Teo and the rest of the talented management team from PCI, whom we expect will play an important role in the company and its success following the closing of the transaction. I'd like to turn the call over to EL Teo, Chief Executive Officer of PCI, to provide some background on the company. Thank you, Rob. This is an exciting day for the entire PCI team. I want to tell you about PCI and why I believe our future is so bright as part of Celestica. PCI is one of the largest providers of EMS solutions in Asia, with an exclusive focus on diversified markets. With our headquarters in Singapore, we have five design and manufacturing centers strategically located throughout the region, including in Singapore, China, the Philippines, and Indonesia. I believe that a critical part of PCI's success is our team of design engineers that have helped us to build innovative, industry-leading capabilities and a differentiated engineering and IP platform. We have focused on building capabilities in emerging industries where we can truly provide differentiated value to our customers. We also pride ourselves on being a collaborative partner to our customers. We maintain strong relationships by working closely to create solutions that support them to achieve their goals throughout the product life cycle, from design through manufacturing and new product introduction. Our customer-centric approach and deeply embedded relationships, enabled by our design lab capabilities, have allowed us to retain and expand our mandates with many of our blue-chip Fortune 500 customers. This is reflected by the fact that our top 10 customers have been with us for an average of 14 years. We view the transaction with Celestica as a natural next step in our evolution that will enable us to advance our capabilities and provide even greater value to our customers. We are excited to leverage Celestica's global footprint and world-class resources as a tier-one EMS player to accelerate the expansion of business while bringing our differentiated engineering capabilities to their already impressive team. Next, I would like to provide an overview of PCI's unique capabilities in a number of different areas. Not only does PCI have a strong presence in their key markets such as industrial, telematics, specialty equipment, and smart home, but we also bring a wealth of experience and a uniquely differentiated approach to engineering-led engagements with our full product development expertise. In RF design, PCI designs telematics systems and manufacture devices which enable fleet management systems. PCI telematics capabilities enable intelligent transportation systems that can be customized to the needs of the customers, whether that's a municipality responsible for a fleet of buses or hospital managing its ambulance response time. PCI's Human-Machine Interface offerings are an area that we believe represents a significant long-term growth opportunity. Industrial machinery and vehicles are increasingly adding display interfaces. PCI brings a wide range of expertise relevant for Human-Machine Interface products, including design and manufacturing of LCD modules, Single-Board Computers, and clean room assembly, amongst others. These proof points can be leveraged to increase the breadth of our combined offering to Celestica's customers. Of course, in the age of Internet of Things, sensors and radio modules are more critical than ever for use by end users and data harvesting for companies. These applications are very broad and quickly expanding as both companies' and consumers' demand for data continue to grow. This underlying technology also works in combination with artificial intelligence to create automated solutions that can leverage and analyze data in real time with true decision-making capabilities. PCI supports a number of IoT applications that rely on this type of technology, including everything from home security systems detecting movement to smart beds that track sleep, heart rate, and temperature. In embedded systems, such as Single-Board Computers and Computer-on-Modules, PCI offers hardware solutions that incorporate many common computing components that can be customized and integrated into a wide range of end products. We believe that pairing of PCI unique expertise in these exciting markets, combined with Celestica's established formula for success as a global tier 1 leader in the EMS space, will help accelerate the growth of our business. Together, we believe that we will be able to push the boundaries of innovation in our industry and deliver stronger, more comprehensive solutions to our customers. Before I turn the call over to Mandeep, I want to thank the entire PCI team for their dedication and hard work that led us to this point. I know that with Celestica, the brighter days are ahead of our organization. Thank you, Mandeep. Over to you. Thank you, EL. I want to echo EL's excitement about the opportunities that we anticipate for both of our organizations through this transaction. We believe the addition of PCI to the Celestica platform is a combination where the whole is truly greater than the sum of the parts. While EL has already highlighted some of PCI's differentiated expertise and capabilities in high growth markets, I want to touch on a few of the other benefits that we see from this acquisition. First, PCI's market presence and expertise in areas that are complementary to Celestica's key competencies are expected to drive cross-selling opportunities across our existing portfolio. Second, PCI's strategically located facilities across Asia will expand Celestica's footprint in attractive, low-cost regions with skilled labor in close proximity to where our customers are operating. Third, the addition of PCI's commercial portfolio is expected to further diversify Celestica's customer base, with the anticipated addition of more than 20 long-tenured blue-chip customers, allowing us to achieve greater consistency in our financial performance through market cycles. I now want to talk more about the financial aspects of the deal and why we believe the acquisition of PCI is such an attractive opportunity for Celestica. We're acquiring PCI from Platinum Equity for $306 million in cash, which reflects an EV/EBITDA multiple of less than 7x. Given the growth profile of PCI's portfolio, its strong margin performance, and its highly differentiated design and engineering capabilities, we believe this is a very attractive price for this asset. PCI presents compelling financial benefits for Celestica, meeting all of our stringent financial hurdles and criteria for M&A transactions, including accretion to our non-IFRS adjusted EPS in year one and generating returns anticipated to exceed our cost of capital by the second year or sooner. As we integrate PCI into Celestica, we also expect to realize certain cost synergies following the completion of the transaction, particularly in the areas of supply chain optimization. We expect these synergies to further enhance PCI's operational results starting in the second year of ownership. PCI's financial profile is characterized by strong, sustainable growth on both the top and bottom line and aligns with our focus towards non-IFRS operating margin expansion. PCI is expected to generate approximately $325 million of revenue with $45 million of adjusted EBITDA in 2021, 100% of which is derived from diversified markets, complementary to our ATS segment portfolio. PCI has a demonstrated track record of consistent top-line growth with a revenue CAGR of 10% over the past three years. The company's focused go-to-market strategy, new wins, and solid proof points have helped it to generate a strong sales pipeline in attractive markets, which we believe will support strong growth into 2022 and beyond. This further supports the positive outlook for our ATS Segment and gives us added confidence to achieve our long-term ATS Segment revenue growth rate target of 10% per year. PCI's portfolio also has a compelling double-digit adjusted EBITDA margin profile that is accretive to Celestica's ATS Segment margins, driven by strong design capabilities and a track record of driving operational efficiencies. With the acquisition of PCI, we believe that our ATS Segment will be comparable to like-sized tier 1 ATS peers that derive the majority of their revenues from diversified, high reliability, end markets. The annual revenue of our ATS segment is expected to be approximately $2.8 billion in 2022 and have a targeted revenue growth rate of 10% over the long term. ATS, similar to these like-sized tier 1 peers, also generates high gross margins reflective of the high barriers to entry in these end markets. We draw this comparison to highlight that these like-sized tier 1 ATS peers are currently trading at an EV to EBITDA multiple up to 10x. Looking at non-IFRS gross margins more closely for all of Celestica, you will notice that gross margins have been expanding across our portfolio over the last two years. In fact, gross margins last quarter at 8.4% was up 180 basis points from two years ago. With the addition of PCI, we expect gross margins to expand even further. Our second quarter pro forma gross margin profile with PCI would have been 8.8%, reflecting 40 basis points of accretion. This margin profile puts Celestica as one of the top gross margin performers amongst tier 1 EMS peers. We highlight this because amongst tier 1 EMS peers, we have historically seen strong correlation between gross margins and valuation. As we continue to target revenue growth and expanding margins, we believe that there is an opportunity for shareholder returns to be unlocked if the multiple being applied to peers with comparable margins were to be applied to Celestica over time. Now, turning to our revised outlook. As a result of the anticipated PCI acquisition and the expected addition to our top-line growth and accretive impact to our operating margins, we are raising our financial outlook for 2022. We now expect to achieve revenues of at least $6.3 billion with non-IFRS operating margin between 4.0% and 5.0%. The PCI acquisition will also be accretive to our non-IFRS adjusted EPS in the first year. As a result, we are raising the outlook for our non-IFRS adjusted EPS growth for 2022 to 20% or more compared to 2021. Versus our prior outlook of growth of 10% or more compared to 2021. Following the closing of the transaction, our pro forma gross debt to non-IFRS trailing 12-month adjusted EBITDA leverage ratio, assuming the transaction had closed on June 30th, 2021, is expected to be approximately 1.8x compared to 1.4x prior to the transaction. As Rob noted earlier, our ability to drive improved operating margin and strong, consistent free cash flow gives us solid financial flexibility. While we will focus on de-leveraging in the near term, we expect to continue our balanced capital allocation approach that includes investing in our business and returning capital to shareholders through share repurchases over the long term. I'll now pass the call back to Rob for closing remarks before we take your questions. Thank you, Mandeep, and thank you again, EL, for joining us today. We believe that today Celestica is stronger than we have ever been, both financially and operationally. The PCI transaction represents an opportunity to extend PCI's design platforms across ATS's markets and build on our momentum in high-growth markets that are aligned with long-term industry tailwinds. The addition of differentiated design and engineering capabilities will help us build on our strong innovation platforms, expand into adjacent emerging markets, and create cross-selling opportunities for both Celestica and PCI. Through the acquisition of PCI, we will be enhancing our footprint in Asia, where many of our customers operate, and diversifying our customer base with the anticipated addition of more than 20 blue-chip customers to our portfolio. PCI checks all the boxes with respect to our strict financial M&A criteria and is intended to enable us to strengthen our financial profile by enhancing our top-line growth potential, expanding our operating margin, and further diversifying our business to perform through market cycles. Simply put, we believe the acquisition of PCI will make Celestica stronger. We are confident that with PCI we will create new and exciting opportunities for Celestica and PCI, and we look forward to working with EL and his team in the years to come. Operator, please open the line for questions. As a reminder, to ask question you will need to press star one on your telephone. To withdraw your question press the pound ot hash key. Please stand by while we compile the Q&A roster. Your first question comes from the line of Robert Young with Canaccord. Hi, good morning. Maybe the first place for me to start would be around the new end markets, the customer profile. You said that you're adding 20 blue-chip customers. I think elsewhere in the call, you said Fortune 500 customers. Is there any detail you can provide around those? I think you said they're new customers. Any further detail around that would be helpful. Oh, yes. Hi, Rob. This is EL. Let me give you some color and flavor of the 20 customers we mentioned in the call just now. We are actually primarily focused, and the customers are mainly in the segment of industrial telematics as the main market segment that these 20 customers actually serve. We have just a couple of them are very high-end consumer customers, but I would say primarily in the industrial segment as well as the telematic segment. Okay. Then in the revised guidance. Sorry, go on. No, go ahead. In the revised guidance, are you expecting any revenue leakage? I think you said you are adding $300 million of revenue, but the trailer or the 2021 revenue is $325, and so just trying to understand that? Yeah. Hey, Rob. No, we don't expect any revenue leakage. One of the reasons we're so excited about this transaction is the vast majority of the revenue, and the customers are located in industries with double-digit billion dollars TAMs growing at double-digit growth rates. These are markets and customers that we don't have a lot of exposure to. We do think that there is a nice synergy opportunity in order to take some of those capabilities that Celestica already has and sell them into PCI's existing customers and vice versa. Okay, great. I was looking at the operating margin guidance range for ATS, 5%-6%, which is the same as previous guidance, and you're guiding to the middle of that range, but you're raising the overall corporate margin target. Is there something in CCS to be thinking about here better than previous? If you can help me understand why the ATS margin guidance isn't changing the overall- Yeah Range. No, absolutely. What we're seeing as a company is that PCI is going to be adding somewhere between 30-40 basis points of accretion to the full company. When we've been giving now the guidance of 4%-5%, that's inclusive of that accretion. You'll note, of course, Rob, that our traditional target margin guidance range was capping out at 4.5%. We have raised it now to 5.0%. On the ATS side, we said that we were targeting 5.5%. Of course, we're working towards that, trying to do more than that. When we had given previous color on ATS, we had shared that the business would be in its margin range the entire year, which could have implied at the lower end of the range. We're letting everyone know that we're feeling confident that the business should be able to do 5.5%, and of course, we'll work to try and do better than that. Okay, great. Last question, just around the HPS business. Seems as though this is going to drag you into some new areas. Maybe you can talk about how this expands the JDM or HPS business. Then I'll pass the line. Sure, Rob. Yes, some of the capabilities that PCI brings, especially in the areas of RF design, might have some applicability in the HPS area, in the areas of edge computing. It's still early days in the areas of integration, but we'd be certainly looking to expand those capabilities into HPS markets. Additionally, in terms of the process of engineering, the functions of engineering, we have a global engineering footprint, and we'll be looking to capitalize on that footprint to expand EL's capabilities and PCI's capabilities around the globe. We should be able to take these capabilities that we have, which are centralized largely in Asia, and be able to extend them throughout the globe, which will improve PCI's reach and enable some cross-selling. Okay, great. Thanks. Congrats on the acquisition. I'll pass the line. Thanks. Your next question comes from Ruplu Bhattacharya with Bank of America. Hi. Thank you for taking my questions. Maybe the first one for EL, can you talk about the seasonality of the PCI business? Which quarters are stronger, which are weaker? All right. Thanks, Ruplu, for that question. Before I talk about the seasonality, I think I've already earlier shared that our customer base are primarily in the industrial, commercial, and also telematic. Not highly geared towards consumer, even though we have that, but it's also high-end. Because of the main segment I mentioned, they present less of a seasonality fluctuation throughout the years. Actually, what we have been experiencing so far has been a fairly less dynamic, more evened out quarters of revenue and the business. This is exactly how our customers operate in their end market. I would say very later dynamics along that. There may be occasional because of business condition, but I would say it has always been fairly less dynamic in terms of the seasonality. Okay. Thanks for the details on that. Right. You've talked about synergies. Maybe Rob or Mandeep, can you talk a little bit about the level of integration or restructuring that you see as you bring PCI into the business? In terms of synergies, can you talk about what are you baking in in terms of revenue synergies as well as synergies at the operating margin level? Sure. Hi, Ruplu. I'll start off. I'll let Mandeep finish up. We're expecting synergies in three areas. The first one is in supply chain, combining our scale between the two companies. The second is within operations, deploying the Celestica operating system throughout PCI's operation. The third is cross-selling. As we mentioned during the presentation material, we're looking to combine our customer portfolios and innovation platforms to take these design platforms that PCI has and extend them across Atrenne's market, and we think there's great synergy there. With that, we're looking for some cross-selling opportunities. Given supply chain lead times and also just time to implement some of these things, we're not expecting anything material until the second year onwards. I'll let Mandeep answer the second part of your question. Yeah, just to round up the answer, Ruplu. The restructuring will not be required in order for us to both integrate the business as well as in order for us to realize the synergies, which, as Rob mentioned, starts in the second year. From an integration perspective, PCI is a very strong standalone business, and we have a pretty defined integration methodology for acquisition. Essentially, if there's a business case to integrate something, we will. If it's a control item, we will. I think one thing you may have noted is that PCI was a publicly traded company not too many years ago. The control framework within that business is quite strong, so we don't see a need to over-integrate the business. Okay, maybe just a follow-up on that, Mandeep. I kind of remember that PCI had about 500+ employees. How many employees are you taking on? Is that the right number? How do you see that impacting OpEx? Actually, PCI has close to 3,000 employees. Their largest manufacturing facility is in Indonesia, where they have almost 2,800 employees. They do have a significant footprint. From an OpEx perspective, it's going to be largely in line from a margin percentage or revenue perspective, their SG&A. We expect they'll be relatively consistent with Celestica. Okay. Thanks for the clarification on that. Maybe if I can just sneak one more thing in. Your debt to EBITDA ratio will grow to 1.8x. Can you remind us what level of debt to EBITDA are you comfortable with, and how does this impact your appetite for future M&A? Thank you so much, and congrats on the acquisition. Absolutely, Ruplu Bhattacharya. Yes, to your point, we were at 1.4x gross leverage at the end of last quarter. Had we closed PCI at that same time, it would have added about 0.4x the leverage. That would have gotten us to 1.8x. From a credit facility perspective, we're able to go to a maximum of 4.0x, although we don't have any intention of doing that. One thing that we have shared over the many previous calls that we've had is that we are comfortable as a company operating in the 2x-2.5x gross debt leverage ratio ZIP code. We will be comfortable going above that as long as we can get back into that range in a short period of time. As it relates to future M&A, we do continue to have a balance sheet that is strong, but we're focused on our long-term capital allocation priority. As you know, that is to invest 50% of the business through things such as PCI, but also to return cash to shareholders, and we think we've been managing that split pretty well. We will continue to look at M&A, and we do have the balance sheet to execute on it. We have the management bandwidth as well. I think it's safe to say that in the near term, we're going to be very focused on integrating the business and helping PCI meet their business case. Thank you for all the details. Thanks. Thanks, Ruplu Bhattacharya. Your next question comes from the line of Thanos Moschopoulos with BMO Capital Markets. Thanos, your line is open. Sorry about that. Good morning, and congrats on the acquisition. Maybe just following up on the balance sheet question. At the current leverage ratio, would there be any constraints to share buybacks or no? No, there will not be. There aren't any restrictions or negative covenants on our credit facility that prevent us from doing more buybacks at this time. Our buyback program is scheduled to expire in November, and it's our anticipation right now that we would be renewing the program once that time comes. Okay. If we look at the 10% three-year CAGR that the business has achieved, EL Teo, maybe you can provide more color in terms of just what specifically has driven that. Has it just been a broad mix of the various markets you're exposed to, or have there been a couple of those markets that really stood out in driving that 10% CAGR? All right. Yes, Thanos. Maybe I just give some color of that. I think you have seen that the CAGR is about 10% over the last three years. I think those are driven by two fronts. First one is because, of course, we have grown some share of wallet from our existing customers. I think that's one of the contributing factor. The other most important one, I think, is also we brought on board new customers that help contribute to the revenue growth. This all coming from the two fronts. Again, I would just say that the CAGR that we have seen, other than the two fronts, there's one more layer of important factor. It's actually the fact that we are getting a lot more business in these two fronts I just mentioned in the design space. I think that helps a lot as well in enchanting our relationship with the customers. Okay, great. Rob, you alluded to some of the capabilities from an HPS perspective. If you look at the current revenue mix of PCI today, how much of that would you characterize as HPS per your definition? About a third of PCI's revenue, I think we would classify as HPS or perhaps JDM. While it's focused more on the industrial telematics markets, I still think based on the design platforms, we would classify it as JDM or HPS. Okay, great. Thanks for that, Rob. Okay. Your next question comes from the line of Paul Treiber with RBC Capital Markets. Thanks very much. Good morning. Just looking through PCI's some of the old annual reports. I think in 2018, the top three customers were 43% of PCI's revenue. Is that still the case? What's the% of revenue from top 10 customers? Yeah, Paul. I can give some color on that. I think yes, when you drew out that information, I think it just flowed that 43% come from the top three at that time, 2018. I think the dynamics and the profile has been changed and adjusted. I would say that currently, based on the latest revenue profile, our top 10 customers actually represent close to 75% of our revenue. Right? Okay. That's helpful. In terms of the revenue growth through this year. In light of the supply chain disruptions that we've seen in the industry and then like COVID shutdowns or not, how has revenue growth been through this year relative to the 10% over the last three years? Oh, actually, Paul, I think I would like to say that it has been interesting this year because of our long relationship with our customers. I think you have seen the presentation script. Our top 10 has been with us for many years. In terms of the supply chain constraint signal, the company actually saw it late last year. Because of that, we have experienced through in the last many years, we sort of work with our customers to line up some preparation of the material buffer and so on. I think that helps to cushion us through at least the first two to three quarters of this year, right? Helping us to continue to make our revenue to be on a rising trend, despite of the market component situation. In fact, the CAGR that you have seen over the last three years is not in any way affected up to this point of time because of the market constraint. I think we have done quite a bit of preparation prior to the avalanche coming in early part of this year and also the second quarter through now, I thought that has been a good planning that we have done with our customers since the second half of last year, right? I think that helps to maintain at least the CAGR through the last three years up to this point of time. Okay, one last one for me. Just to Rob and Mandeep, the return will be above the cost of capital in the second year, and it's great to hear. How do we think about the IRR and the acquisition, relative to Celestica's acquisitions in the past? Hey, Paul. Yes, we are aiming for the ROI to be ahead of our cost of capital by year two, we did say, or sooner. Frankly, with the strong margin profile of the business, we think that there is a strong possibility that that could be in the first year as well. Relative to previous acquisitions, because a lot of times the profit that you're buying is taken into account when you're looking at the purchase price, what we find is that the ROI is relatively similar. We look at acquisitions that typically have an ROI that's going to be in the low double digits by the second year. I would say that between Impakt and Atrenne, and now with PCI, they all kind of are in a similar ZIP code. Okay. Thank you. Thank you. Your next question comes from the line of Todd Coupland with CIBC. Yeah. Good morning, everyone. I was wondering if you could give us a little background on how this deal came about and brought the two companies together? Hi, Todd. This is Rob. Yeah. I would say this was not a broad auction process. We've had our eye on PCI for a long period of time. When it came to market, I think at the end of the day, we were the most logical buyer for PCI. We worked very closely with Platinum Equity and the PCI team to work through a process and we were able to consummate a deal. Okay. Thank you. My question on PCI in terms of competitive landscape, given there's limited overlap with Celestica, who are you typically competing against from a design perspective, and then ultimately from a broader EMS offering perspective? Thank you. Yeah. Thanks, Todd, for the question. Before I get into the competitive landscape, maybe I just give some color about our engineering capability, which I think is primarily driving our growth. Our capabilities are very centered and specialized in wireless IoT antenna design, as well as product with LCD display. We call it HMI, coupled with the embedded system, which is the PCBA. Because of our specialty in this area and deep expertise in this design know-how, we typically will compete with design house that are very, very deep in knowledge in this respect. This is one of the category of our competitive landscape. Typically, as you know, design house doesn't have total product fulfillment, they're just doing design. I think we have sort of from the end-to-end supply chain product fulfillment perspective, we have a certain stronger edge against them, so we can bring the product from cradle to grave as compared to just design house. The other category, if you talk about the EMS marketplace, we typically come across competition from high tier 2 and even the tier 1 players. We have been able to see ourselves successful in even winning deals against the tier 1 EMS player in the world. As I said again, that's because we have a very specialized design know-how and deep design knowledge in bringing product to meet the customer expectation. On top of that is because of our speed of execution. Our time to market is always on the forefront when we come to that competitive landscape. That continues to give us the advantage over the other competitors we are seeing in the market globally. Right? When you say tier 1, if I'm right, Flex has a big RF design capabilities. Is that what you mean when you say tier 1? Then are you able to call out any specific tier 2s that you typically come up against? Thank you. All right. Tier 1, I think, it is not unknown in the world. I think people like Flex or even Jabil has got design team that from time to time we do encounter in RFP, RFQs. Tier 2 guys, I'm more looking at people like, if we were to say to some extent I call it like Benchmark high tier 2, low tier 1, right? These are the category of peoples that we're looking at. Again, in our eyes, I think the way we look at competitive landscape is not really tying ourselves to tier 1 or tier 2 EMS. We are looking at people with very deep knowledge and expertise, right, in the area I just described. In terms of PCI design strength, we are not a broad skill shop that covers all type of design. The fact that we are very specialized, I think, always give us the extra edge against the competition in the market because this competition is always evolving in the world and we are always trying to be ahead of the curve with the specialty that I just mentioned, coupled with the speed of execution in which in this current marketplace, speed of execution and delivering products to market is in fact, I think, the primary driving winning factor in this competitive world. Okay, two other quick questions, if I could. Sure. From a blue-sky perspective in the 5G marketplace, it's been a little bit slow to evolve, but how are you thinking about that opportunity, in Internet of Things, let's say in a two or three-year timeframe? Thank you. If I were to draw like the 5G, I think many of you are aware of this 5G, which is also, I call the shorter range communication in terms of the wavelength. I think the way we are looking at it is that, at the end, it's about the total ecosystem of what PCI design expertise, the offering IoT wireless can fit into the broader scheme of things of the wireless or what you call it, short range or long-range communication. In this whole communication ecosystem, 5G has a big role to play, we all know, in data transmission, in mobile communication. In short range IoT space, our expertise can actually integrate whatever evolving technology because of 5G, because of short range LoRa and Sigfox. Our view is that PCI expertise, when we say about IoT wireless, actually it all comes back to one fundamental hardware, is actually antenna design. This is something that PCI has very good strength on in terms of hardware antenna design, coupled with software tuning. If you look at the 5G, it also boils down to this fundamental called hardware, which is antenna design. This is something that PCI constantly is working on. Even in fact in the analog days, right, into GSM 3G, 4G, we are in it and we are going to continue to evolve and invest our expertise to progress further in view of the market evolution in this communication space. Thank you very much. Last question. There have been some Asian countries that have been affected by plants shutdowns over the course of 2021. Can you just talk about your experience during COVID and what capacity you're currently operating at? Thanks a lot. Sure. Let me bring you back like exactly one year ago when the COVID was in a very uncertain period globally. If you look at PCI footprint that I think you have seen in the presentation screen earlier, we are mainly in Asia. Our main factory is in Indonesia in an island called Batam, which is about 26 miles south of Singapore, right? We also have a headquarter in Singapore with design and small-scale manufacturing. The other factory we have is actually in China. If you look at the span of how COVID has affected the countries in Asia, right? Last year it was badly affecting China, in which we have our Indonesia plant that is continuing to support the revenue. We are least affected. Coupled with the fact that China managed to come back on board as a country, as well as our operation coming back quickly to operation. I would say that we have gone through a fairly stable state in the second half of last year. However, when the COVID come in the big time, affecting Asia, even until today, we were fairly fortunate because first Singapore, which where we are located and our main source of engineering is residing here in Singapore. I think the government has a very good control system to allow business to continue as much as possible, right? I think in Singapore context, we were very well managed in terms of COVID. Now coming to our flagship plant in Indonesia in an island called Batam. Batam was not actually being badly affected despite we have seen a lot of news about Southeast Asian country being affected. The very reason is because Batam is an island, right? When you have an island, the Indonesia way of isolating movement actually helps PCI because our factory has been, and the island itself is least affected, I would say, compared to the archipelago of Indonesia. In this light, we were very least affected by the COVID in Indonesia. As a combination of all the geographical sites we have, Singapore, China, as well as Indonesia, I would say that our operation has been almost up and running throughout the last 15 months since COVID started in January last year, the uptime has been more than 95%-98% uptime. In terms of our run rate, currently our capacity occupation is also at about 75%. We are doing good, if not even well so far. Right? Thanks for all the color. Appreciate it. No problem. Your next question comes from Daniel Chan with TD Securities. Hi, good morning. Some of these end markets, like the smart home, seem to have a bit of a consumer angle to it, which Celestica exited a long time ago. Just wondering if you're thinking about exiting any of these end markets and reallocating resources to maybe some of the other stickier markets. Sure. I think I can give some color. It is true that when you talk about this smart home everything, it is very geared towards consumer. In fact, in PCI, we are not really working on targeting all in this consumer range smart technology or digitization. We are very much into the more infrastructure type of setup and smart application. I don't think we are in, so there's no exit point to discuss, but we are very much into the infrastructure and we expect to see a lot more growth in the infrastructure space in terms of smart application. Dan, the only thing I maybe would add to that, this is Mandeep here, is that the areas that PCI is participating in, though, we still find to be attractive. So there's not really a reason that we feel we need to disengage. They're either very niche markets with very limited competition, or there's a high level of complexity from a technology perspective. Because of that, it actually leads to attractive margin. So we believe that the business that may fall into industries that we traditionally would not have targeted is actually quite sticky business for PCI, and we believe it's a good foundation. Okay, that's helpful. Thanks. The EBITDA margins are significantly higher than any other public peers that we're looking at, including some of the tier 2 peers that were mentioned. Any color on how you're able to achieve that kind of margin, and is it a result of program mix or operational efficiency? EL Teo, maybe you can start off, and then I will round it out. Sure. Thank you, Mandeep. On that part, I think what we are able to always do in terms of margin, is primarily because of our two aspects. One is actually on our engineering expertise, like I mentioned, because our design is very specialized. Typically in that space, you tend to command a little bit higher margin than the other generic design environment. I think this is the first aspect. Now, the other aspect is also from the operation front, because we are specialized in the type of products we do, like I mentioned, IoT wireless. In terms of operation efficiency, in terms of supply chain factory operation, we are very geared and skilled to that front. I think that also gives some operating efficiency with respect to a generic production or manufacturing environment. I think all these two adds up to a higher margin space that we can continue to command. Yeah. Dan, I'll just add to that, which is, look, PCI is a very strong business for all the reasons we've talked about, and they've been able to have a strong margin profile. What's interesting is that PCI's margins, though, are not materially higher than our ATS business from a gross margin perspective. We did have a slide in the deck which was showing that ATS is running at around 9.6% gross margin. As we continue to grow that business and the SG&A becomes a smaller portion of it, you'll see that drop to the bottom line. When we add in PCI, it's about 60 basis points of accretion. What we believe is that this is really an underpinning of our strategy, which is targeting markets with high barriers to entry that have a lot of deep engineering content embedded in them because they do allow for richer margins. As we continue to grow ATS, we're working to maintain the strong margin profile going forward. It's not just a current situation. Okay, thanks. Last one from me. Good to see that the largest factory is in Indonesia, which I think diversifies your Asia footprint. Will you be repurposing some of these factories for your current businesses, especially as hyperscale customers look for more capacity outside of China? That's certainly an option in terms of what we would look to do to expand on some of the facilities that PCI has. Right now, we see potentially the need to add more capacity in Asia and potentially the need to add more capacity in the Americas. As we progress on our strategic plan and as business continues to grow, we'll certainly evaluate those options. Great. Thank you. Your next question comes from the line of Jim Suva with Citigroup. Thank you. You mentioned in your remarks in the Q&A that you're very strong on the PCI with antenna and fleet management and such. We're typically used to companies like Amphenol, TE Connectivity, and Sensata in that area. Are they actually your customers, or are they competitors, or is it just completely different product solutions that you're doing? Hi, Jim. Thanks for the question. I think they are typically quite in a different segment than what we are in currently. I would say not directly head-on competitor because they are in a slightly different field, yeah, and different target market perhaps. Okay. Thank you. For Rob, maybe the answer is rounding difference, if PCI had, say, $325 million of sales this year, you're increasing your sales outlook next year $300 million, we would assume, based upon the presentation, that PCI is growing, shouldn't it be more than $300 million to your increased outlook for next year? Is it just rounding differences and there's nothing to read into there? Hey, Jim. No, nothing to read in there. It's rounding. We had guided, and it's Mandeep, by the way, not Rob's voice, we did $6 billion as our outlook for 2022 just about a month or two ago. What we wanted to share was is that we continue to remain confident in that outlook that we had provided, and we're adding on PCI to that. Yes, we do expect PCI to be driving at 10%+ growth next year. It's really coming down to rounding. Okay, great. Thanks so much, Mandeep. That concludes the question and answer portion of today's call. At this time, I'll turn the conference over to Rob Mionis, Chief Executive Officer, for any closing remarks. Thank you, Erica. Thank you all for joining this morning. Celestica is stronger than it's ever been, both operationally and financially. The acquisition of PCI builds upon the strong foundation we have built and represents the next step in our multi-year strategic transformation. We're all looking forward to working closely with EL and the entire PCI team, and we also look forward to updating you on our progress next month. Thank you again, all, for joining, and we look forward to talking to you soon. Thank you for participating. 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